1. These two appeals arise from the judgments of the District Judge of Broach. The dispute relates to the legality of the levy of license fees from the appellants under a rule which is No. 208 (a) passed by the Broach City Municipality and sanctioned by Government on July 2, 1934. The plaintiffs, in the two suits Nos. 330 and 331 of 1934, from, which these appeals arise, are respectively traders in fire-wood and charcoal, and manufacturers and sellers of sweetmeats and confectionary, and carry on their business within the Broach Borough Municipal limits. They alleged that the Municipality proposed to levy yearly a license fee according to the new rule upon their trade and claimed a declaration that the Municipality had no right to recover any sum whatever from them under the pretext of license fees particularly when the avowed object of the levy was to enable the Municipality to meet educational expenses, They also claimed injunction against the Municipality preventing that body from recovering those fees. The Courts below have held that the levy was legal, and in consequence the suits were dismissed with costs. Against those decrees the plaintiffs have brought these two appeals.
2. It seems to me that the case of the plaintiffs who are dealers in fire-wood and charcoal can be distinguished from the other case in which the plaintiffs are manufacturers and sellers of sweetmeats and confectionary. It will be convenient to deal with the case of the former plaintiffs first.
3. It is common ground that under the by-laws framed by the Municipality under Section 61 of the Bombay Municipal Boroughs Act (Bom. XVIII of 1925), it is necessary only for traders in fire-wood and charcoal to obtain licenses for carrying on their trade. No fee was prescribed for the grant of such licenses until the new rule, which is distinct from a by-law, was framed in 1934. That rule which is rule No. 208 (a) of the Broach City Municipality provides as follows:--
License fees shall be chargeable per year for every license issued for--
(9) Storing wood, coal, charcoal.
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(11) Manufacture and sale of sweetmeats.
Against each item the amount of annual license fee is given in the column) of the fees prescribed. For the one in serial No. 9 above the annual fee is Rs. 12 and for serial No. 11, Rs. 25. Now, that rule is made in the exercise of the power given to the Municipality by the provisions of Section 58(j) of the Bombay Municipal Boroughs Act. That section authorises the Municipality to make rules not inconsistent with the Act prescribing the taxes to be levied in the municipal borough for municipal purposes, and the fees to be charged for licenses or permissions granted under Section 90. Section 90(1) provides as follows:--
When any license is granted under this Act, or when permission is given thereunder for making any temporary erection or for putting up any projection, or for the temporary occupation of any public street or other land vested in the municipality, the authority granting or giving such license or permission may charge a fee for the same.
That seems to be the only provision in the Act authorising the Municipality to charge license fees. Obviously the question of charging fees must arise when a license is granted. And a license could only be granted if the law requires a license; to be granted. It is not claimed that all trades must be carried on under a municipal license. That is also made clear in the penal provisions of the statute. Section 186, Sub-section (4), provides as follows:--
Whoever uses without a license or during the suspension or after the withdrawal of a license, any place for any purpose mentioned in sub-section (1) in any municipal borough in which by-laws are for the time being in force prescribing the conditions on or subjects to which, the circumstances in which, and the areas or localities in respect of which, licenses for such use may be granted, refused, suspended or withdrawn, shall be punished with fine,' ...
In sub-s. (i) of that section the following provision occurs:--
If it be shown to the satisfaction of the standing committee that any building or place used or intended by any person to be used--
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(n) for storing hay, straw, fodder, wood, coal or other combustible material,
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(p) for the manufacture or sale of sweetmeats,
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the standing committee may by written notice require the owner or occupier--(i) at once to discontinue the use of, or at once to desist froml carrying out or allowing to be carried out the intention so to use, such building or place, or (ii) to use it in such manner or after such structural alterations as the standing committee in such notice prescribes, so that it may not become, or may be no longer, a nuisance or dangerous.
There is no provision in the Act requiring the persons carrying on the above trades to apply for and obtain a license. Whether they should be so required is left to the discretion of the Municipality under the scheme of the Act; and the Municipality may by framing the necessary bylaws require any trade to be carried on under a license. Accordingly a penalty is provided for using a place for a trade without a license when the by-laws provide for obtaining a license. In the case of the fire-wood dealer the by-laws, as I have said, provide that a license should be taken. If so, the Municipality was competent to make rules prescribing the fee to be charged for such license. Prima facie, therefore, the action of the Municipality would be justified.
4. But it is urged that the action of the Municipality was irregular, if not illegal, because they could not raise revenue for general purposes under the guise of imposing license fees, for it is said that different formalities are laid down for levying a tax and a license fee, and as the avowed object of the Municipality was to supplement the income for educational purposes, this imposition was no other than a tax. That argument, in my opinion, is not altogether well founded. Counsel has relied upon Emperor v. Brij MohanLal (1933) I.L.R. 56 All. 743, for the view that license fees; are quite distinct from taxes and the one cannot be levied in the name of the other for they are distinguishable and the levy of each must be preceded by the requisite formalities. That case would not serve as authority for the obvious reason that the Court was dealing with an entirely different enactment. I readily concede that the law regulating the procedure and formality for the imposition of either a fee or a tax must be strictly observed before the levy can be regularized or rendered legal. It is evident that the procedure in regard to; the levy of a fee is intended by the Act to be different from the procedure in regard to the levy of a tax (see Sections 58 and 75). 'Tax' is defined in Section 3(20) of the Act as--the definition is not exhaustive--meaning 'any toll, rate, cess, fee or other impost leviable under this Act and shall include a water rate.' Apart from the procedural difference there is a very subtle distinction if any between 'tax' and 'fee' as used in the ordinary sense. When imposed by the legislature or local bodies both are burdens or charges upon persons and property, and the object of both is to raise money for a public purpose or to serve some public object. So then, the object for which a fee or tax is levied by a public body would not serve necessarily as a guide for saying whether an imposition is a 'fee' or 'tax.'
5. As I have pointed out above, the levy of license fee is the subject of special procedure in the statute and it is sufficient to say that the formalities--prescribed--I have been gone through in making the rule. Merely because the Municipality before making the rule had in a public notification indicated the object for which it was to be applied--here it was said 'to cope with the increased expenditure of the education department'--it would not in my opinion render the formality observed unsuitable or unauthorised. That the object of the application of a fee or tax does not determine the procedure is evident from the definition of 'Municipal fund' in Section 65 of the Act and particularly proviso (b) thereof. Under the term 'Municipal fund' is included all taxes, fines and penalties paid or levied under the Act. The definition is comprehensive enough to include fees, for the proceeds of all impositions levied constitute municipal fund. The Municipality is also given power in proviso (b) to set apart any portion of the municipal fund for a particular purpose, such as for schools or dispensaries, subject to the Commissioner's approval, and to apply any sums properly so credited exclusively to the special purposes for which such sums were received or set apart. Therefore the object is not the determinative factor in observing the formality for the levy.
6. It is argued that as a tax for educational requirements will fall under the special head under s, 73 (xiii) of the Act, namely, 'special educational tax', any imposition intended to be applied for education must be imposed in the manner in which a tax is imposed and the procedure in Section 75 of the Act should have been followed. Section 73 does not say that the liability of the Municipality for education must be met wholly out of the special education tax. I therefore do not think there is any substance in that objection. If the by-laws of the Municipality require a license to carry on a particular trade or business and the Municipality frames a rule prescribing a fee for granting such a license, and it is not proved that it is unreasonable, the levy in the case of the traders in fire-wood and charcoal would be legitimate and must be upheld notwithstanding the fact that it may happen that the incidence may affect particular trades or professions. Accordingly Second Appeal No. 33 of 1939 must be dismissed with costs.
7. Turning then to the case of the appellants who are manufacturers and sellers of sweetmeats, it appears that priori to Rule 208(a) no license was issued to such sellers. It also appears that no by-law was ever framed by the Municipality requiring a seller or manufacturer of sweetmeats to obtain a license. Undoubtedly the Municipality has power to frame within its discretion such a by-law under Section 61. That section provides as follows:--
(1) A municipality may from time to time, with the previous sanction of the Provincial Government, make, alter or rescind by-laws not inconsistent with this Art--
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(b) prescribing the conditions on or subject to which and the circumstances in which and the areas or localities in respect of which, licenses may be granted, refused, suspended or withdrawn for the use of any place not belonging to the municipality--
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(ii) for the manufacture, preparation, storing, sale or supply for the purpose of trade of any article or thing| intended for human food or drink, whether such food or drink is to be consumed in such place or not;
(iii) for any of the purposes mentioned in sub-section (i) of section 186 (to which reference is already made); ...
As I have pointed out Section 186(1) provides for regulating the) storing of fire-wood and other combustible material and for the manufacture or sale of sweetmeats. In the absence of any by-law in that respect, there would be no obligation to take out a license. The Municipality in order to fortify its right to levy a fee from the sweetmeat seller has first to make a by-law insisting upon a license and then frame a rule prescribing a fee under Section 58(j) of the Act. It will not be sufficient to rely upon Section 90 in the absence of a by-law, for obviously the party need not take out a license, and there would be no power in the Municipality to punish him for that omission. Therefore Second Appeal No. 34 of 1939 filed by the plaintiffs-sweetmeat sellers must be allowed and the lower Courts' decrees set aside. There shall be a decree in the plaintiffs' favour in terms of the prayer in the plaint with costs throughout.